SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by registrant [X]
Filed by a party other than the registrant[ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[X] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
The Future Germany Fund, Inc.
(Name of Registrant as Specified in Its Charter)
The Future Germany Fund, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
[x] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<PAGE>
THE FUTURE GERMANY FUND, INC.
31 West 52nd Street
New York, New York 10019
--------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
March 27, 1995
--------------------
To our Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders of The
Future Germany Fund, Inc. (the "Fund") will be held at 10:00 A.M., New York
time, on March 27, 1995 at the offices of Deutsche Bank Securities Corporation,
31 West 52nd Street, 2nd Floor, New York, New York for the following purposes:
1. To elect four Directors.
2. To ratify the selection by the Board of Directors of Price Waterhouse
LLP as independent accountants for the fiscal year ending October 31,
1995.
3. To consider, if presented, a stockholder proposal.
4. To consider and act upon any other business as may come before the
meeting or any adjournment thereof.
Only holders of record of Common Stock at the close of business on February
6, 1995 are entitled to notice of and to vote at this meeting or any adjournment
thereof.
Robert R. Gambee
Secretary
Dated: March 6, 1995
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE SIGN THE ENCLOSED PROXY
AND PROMPTLY RETURN IT TO THE FUND. IN ORDER TO AVOID THE ADDITIONAL EXPENSE TO
THE FUND OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN MAILING IN YOUR
PROXY PROMPTLY.
<PAGE>
THE FUTURE GERMANY FUND, INC.
31 West 52nd Street
New York, New York 10019
Annual Meeting of Stockholders
March 27, 1995
---------------
PROXY STATEMENT
---------------
This proxy statement is furnished by the Board of Directors of The Future
Germany Fund, Inc. (the "Fund") in connection with the solicitation of proxies
for use at the Annual Meeting of Stockholders (the "Meeting") to be held at
10:00 A.M., New York time, on March 27, 1995 at the offices of Deutsche Bank
Securities Corporation, 31 West 52nd Street, 2nd Floor, New York, New York. The
purpose of the Meeting and the matters to be acted upon are set forth in the
accompanying Notice of Annual Meeting of Stockholders.
If the accompanying form of Proxy is executed properly and returned, shares
represented by it will be voted at the Meeting in accordance with the
instructions on the Proxy. However, if no instructions are specified, shares
will be voted FOR the election of Directors, FOR the ratification of the
selection of independent accountants and AGAINST the stockholder proposal. A
Proxy may be revoked at any time prior to the time it is voted by written notice
to the Secretary of the Fund or a subsequently executed proxy, or by attendance
at the Meeting and voting in person.
The close of business on February 6, 1995 has been fixed as the record date
for the determination of stockholders entitled to notice of, and to vote at, the
Meeting. On that date, the Fund had 12,027,363 shares of Common Stock
outstanding and entitled to vote. Each share will be entitled to one vote on
each matter that comes before the Meeting. It is expected that the Notice of
Annual Meeting, Proxy Statement and form of Proxy will first be mailed to
stockholders on or about March 6, 1995.
The election of Directors (Proposal 1) and the ratification of the
selection of Price Waterhouse LLP as independent accountants for the Fund
(Proposal 2) require the affirmative vote of the holders of a majority of the
shares represented at the Meeting. The stockholder proposal (Proposal 3) is
advisory in nature and does not involve any required minimum number of votes.
The Fund intends to treat properly executed proxies that are marked "abstain"
and broker non-votes (defined below) as present for the purposes of determining
whether a quorum has been achieved at the Meeting. Under Maryland law,
abstentions do not constitute a vote "for" or "against" a matter and will be
disregarded in determining the "votes cast" on an issue. If a proxy is properly
executed and returned accompanied by instructions to withhold authority to vote,
it represents a broker "non-vote" (that is, a proxy from a broker or nominee
indicating that such person has not received instructions from the beneficial
owner or other person entitled to vote shares on a particular matter with
respect to which the broker or nominee does not have discretionary power).
The date of this Proxy Statement is March 6, 1995.
<PAGE>
INTRODUCTION
The Board of Directors of the Fund has nominated four directors for
election at the Meeting (Proposal 1) and approved the selection of Price
Waterhouse LLP as independent accountants for the Fund for the fiscal year
ending October 31, 1995, for ratification by the stockholders at the Meeting
(Proposal 2). The effectiveness of each of Proposals 1 and 2 requires the
affirmative vote of the holders of a majority of the shares present at the
Meeting. The Board of Directors recommends against the stockholder proposal
(Proposal 3).
PROPOSAL 1: ELECTION OF DIRECTORS
The Fund's By-Laws provide that the Board of Directors be divided into
three classes of Directors serving staggered three-year terms. The term of
office for Directors in Class I expires at the 1995 annual meeting, Class II at
the next succeeding annual meeting and Class III at the following succeeding
annual meeting. Four Class I nominees are proposed in this Proxy Statement for
election.
Should any vacancy occur on the Board of Directors, the remaining
Directors, though less than a quorum, would be able to fill such vacancy for the
unexpired term by the vote of a majority of their number, as at present. Any
Director elected by the Board to fill a vacancy would hold office for the
unexpired portion of the term of the Director whose place has been filled. A
Director elected by the Board to fill a newly created directorship resulting
from an increase in the number of Directors will hold office until the next
election of the class for which that Director was chosen. If the size of the
Board is increased, the additional Directors will be apportioned among the three
classes to make all classes as nearly equal as possible.
Unless authority is withheld, it is the intention of the persons named in
the form of proxy to vote each proxy for the election of the nominees listed
below. Each nominee has indicated he will serve if elected, but if any nominee
should be unable to serve, proxies will be voted for any other person determined
by the persons named in the form of proxy in accordance with their judgment.
Each of the nominees is currently a member of the Board of Directors.
Information Regarding Directors and Officers
The following table shows certain information about the Directors,
including beneficial ownership of Common Stock of the Fund. Each has served as a
Director of the Fund since the Fund's inception in 1990, except for Prof. Dr.
Kohler and Mr. Macmillan-Scott, who were elected to the Board on May 10, 1991
and December 16, 1994, respectively.
2
<PAGE>
The Class I Directors identified below have been nominated for election at
the 1995 Annual Meeting. The terms of the Class II and the Class III Directors
continue.
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned,
Directly or Indirectly,
Name Age Position with Fund Principal Occupations During Past Five Years at February 6, 1995 (1)
---- --- ------------------ -------------------------------------------- -----------------------
<S> <C> <C> <C>
Dr. Rolf-Ernst 56 Chairman, Member of the Board of Managing Directors --
Breuer(2)(3 President and of Deutsche Bank AG. Chairman of the
Class I Director Supervisory Board of DBAM. Member
of the Board of Managing Directors of
Deutsche Bank North America Holding
Corp. Member of the Supervisory Board
of Badenwerk AG. Deputy Chairman
of the Supervisory Board of Durr
Beteiligungs AG. Member of the
Supervisory Board of Klockner Werke
AG. Member of the Supervisory Board
of Preussag AG. Chairman of the Board of
Directors of Euroclear Clearance System
Societe Cooperative. Chairman of the
Supervisory Board of Deutsche Borse AG.
Chairman of the Supervisory Board of
DLW AG. Member of the Supervisory
Board of Salamander AG. Member of
the Supervisory Board of Dyckerhoff AG.
Detlef 51 Director Partner of Sal. Oppenheim Jr. & Cie KGaA. --
Bierbaum(3) Chairman of the Supervisory Board of
Class I Rheinische Kapitalanlagegesellschaft mbH.
Member of the Supervisory Board of Nanz
Stiftung. Member of the Supervisory
Board of ESCADA AG. Member of the
Supervisory Board of Klockner-Humboldt-
Deutz AG. Member of the Board of
Managing Directors of Oppenheim
International Finance. Member of the
Supervisory Board of Deutsche Kontinentale
Ruckversicherungs-Actiengesellschaft.
Member of the Supervisory Board of Tertia
Handelsbeteiligungsgesellschaft mbH.
Member of the Supervisory Board
of Douglas AG.
3
<PAGE>
Shares of Common Stock
Beneficially Owned,
Directly or Indirectly,
Name Age Position with Fund Principal Occupations During Past Five Years at February 6, 1995 (1)
---- --- ------------------ -------------------------------------------- -----------------------
James Macmillan- 42 Director Managing Director of DBSC. --
Scott(2)(3) Chief Executive Officer of
Class I The Germany Fund, Inc.,
The New Germany Fund, Inc.
and The Future Germany Fund, Inc.
(1992-1994). Director of European
Equity of Merrill Lynch, Pierce, Fenner
& Smith Incorporated (1989-1992).
Edward C. Schmults 63 Director Member of the Board of Directors of GP 502
Class I Financial Corp. Member of the Board of
Trustees of The Edna McConnell Clark
Foundation. Senior Vice President-
External Affairs and General Counsel
of GTE Corporation (1984-1994).
Deputy Attorney General of the U.S.,
Department of Justice (1981-1984).
Partner, White & Case (1965-1973 and
1977-1981).
John A. Bult(2)(3) 57 Director Chairman of PaineWebber International, 2,106
Class II Director of PaineWebber Group, Inc.
Director of The Brazilian Equity
Fund, Inc., The France Growth Fund, Inc.
and The Greater China Fund, Inc.
Dr. Juergen F. 55 Director Chairman of the Board of Executive --
Strube Directors of BASF AG. Chairman and
Class II President of BASF Corporation
(1985-1988).
Robert H. 54 Director President of Robert H. Wadsworth 308
Wadsworth(2) & Associates, Inc. Member of the Boards
Class II of Supervisory Directors of ML High
Yield-Treasury Securities Fund N.V.
and ML High Yield-Treasury Securities
Fund II N.V.
4
<PAGE>
Shares of Common Stock
Beneficially Owned,
Directly or Indirectly,
Name Age Position with Fund Principal Occupations During Past Five Years at February 6, 1995 (1)
---- --- ------------------ -------------------------------------------- -----------------------
Prof. Dr. Claus 66 Director Member of the Administrative Board of --
Kohler Bundesanstalt fur Vereinigungsbedingte
Class III Sonderaufgaben (since 1994). Member
of the Administrative Board of
Treuhandanstalt (1990-1994). Member
of the Board of Governors and of the
Central Bank Council of Deutsche
Bundesbank (until 1990). Deputy
Chairman of the Supervisory Board
of Deutsche Verkehrs-Bank AG.
Member of the Advisory Board of
Westfalische Hypothekenbank AG.
Member of the Advisory Panel to the
Board of Governors of the Central
Bank of Oman. Member of the Board
(Kuratorium) of the Institute of
Empirical Economic Research. Professor
of Economics, University of Hannover.
Professor of Economics, University of
Frankfurt a.M.
Christian H. 50 Director Managing Director of DWS-Deutsche 502
Strenger(2)(3) Gesellschaft fur Wertpapiersparen mbH
Class III (since 1991). Managing Director of
Deutsche Bank Securities Corporation
(1986-1991).
Werner Walbrol 55 Director President and Chief Executive Officer 200
Class III of the German-American Chamber
of Commerce. Member of the
United States German Youth Exchange
Council. Director of TUV Rheinland of
North America, Inc. President and
Director of German American
Partnership Program.
5
<PAGE>
Shares of Common Stock
Beneficially Owned,
Directly or Indirectly,
Name Age Position with Fund Principal Occupations During Past Five Years at February 6, 1995 (1)
---- --- ------------------ -------------------------------------------- -----------------------
Otto Wolff von 75 Director Chairman of the Board of Otto 1,263
Amerongen Wolff Industrieberatung &
Class III Beteiligungen GmbH (industrial
consulting). Chairman of the
German East-West Trade Committee.
Honorary Chairman of the Association
of German Chambers of Industry and
Commerce (since 1988). Director of
Exxon Corp. (until 1989). Chairman
of the Board of Management of the
Otto Wolff von Amerongen Foundation.
Member of the Atlantic Advisory
Council of United Technologies Corp.
(until 1992). Chairman of the Supervisory
Board of DWA, Deutsche Waggonbau AG.
Member of the Advisory Council of
AllianzVersicherungs-AG (until February
1994). Member of the Advisory Council
of Creditanstalt-Bankverein. President
of the German Society for East European
Studies. Member of the Board of
Directors of the German Society for
Foreign Affairs.
- ------------------
(1)As of February 6, 1995, all Directors and officers as a group owned less than
1% of the outstanding Common Stock of the Fund.
(2)Indicates that Messrs. Bult, Macmillan-Scott, Strenger, Wadsworth and Dr.
Breuer each also serves as a Director of The New Germany Fund, Inc., one of
the two other closed-end registered investment companies for which Deutsche
Bank Securities Corporation, the manager of the Fund ("DBSC" or the
"Manager"), acts as manager.
(3)Indicates "interested" Director, as defined in the Investment Company Act of
1940, as amended (the "1940 Act"). Mr. Bierbaum is an "interested" Director
because of his affiliation with Sal. Oppenheim Jr. & Cie KGaA, which is the
parent company of a registered broker-dealer; Dr. Breuer is an "interested"
Director because of his affiliation with Deutsche Asset Management GmbH, the
investment adviser to the Fund ("DBAM" or the "Investment Adviser"), with
Deutsche Bank North America Holding Corp. and with Deutsche Bank AG
("Deutsche Bank"), of which DBSC is a wholly-owned indirect subsidiary; Mr.
Bult is an "interested" Director because of his affiliation with PaineWebber
Incorporated, a registered broker-dealer; Mr. Macmillan-Scott is an
"interested" Director because of his affiliation with DBSC; and Mr. Strenger
is an "interested" Director because of his affiliation with DWS-Deutsche
Gesellschaft fur Wertpapiersparen ("DWS"), a majority-owned subsidiary of
Deutsche Bank.
(4) Indicates that Messrs. Macmillan-Scott, Strenger and Dr. Breuer each own
shares of Deutsche Bank, of which DBAM and DBSC are wholly-owned
subsidiaries. As of February 6, 1995, each such Director owned less than 1%
of the outstanding shares of Deutsche Bank, respectively.
</TABLE>
Each Director also serves as a Director of The Germany Fund, Inc., one of
the two other closed-end registered investment companies for which DBSC acts as
manager.
6
<PAGE>
The Board of Directors presently has an Audit Committee composed of Messrs.
Schmults, Wadsworth and Walbrol. The Audit Committee makes recommendations to
the full Board with respect to the engagement of independent accountants and
reviews with the independent accountants the plan and results of the audit
engagement and matters having a material effect upon the Fund's financial
operations. The Audit Committee met twice during the fiscal year ended October
31, 1994. In addition, the Board has an Advisory Committee composed of Messrs.
Schmults, Wadsworth and Walbrol. The Advisory Committee makes recommendations to
the full Board with respect to the Management Agreement between the Fund and
DBSC and the Investment Advisory Agreement between the Fund and DBAM (formerly
known as Capital Management International GmbH of Deutsche Bank). The Advisory
Committee met once during the past fiscal year. At the present time, the Board
of Directors has no compensation or nominating committees, or other committees
performing similar functions.
During the past fiscal year, the Board of Directors had four regular
meetings and one special meeting, and each incumbent Director, with the
exception of Dr. Strube, attended at least 75% of the aggregate number of
meetings of the Board and meetings of Board Committees on which that Director
served.
The Fund pays each of its Directors who is not an interested person of the
Fund, the Investment Adviser or the Manager an annual fee of $7,500 plus $750
for each meeting attended. Each such Director who is also a Director of The
Germany Fund, Inc. or The New Germany Fund, Inc. also receives the same annual
and per-meeting fees for services as a Director of each such fund. Each of the
Fund, The Germany Fund, Inc. and The New Germany Fund, Inc. reimburses the
Directors for certain out-of-pocket expenses, such as travel expenses in
connection with Board meetings. The following table sets forth the aggregate
compensation from the Fund for the fiscal year ended October 31, 1994, and from
the Fund and such other two funds for the year ended December 31, 1994, for each
Director who is not an employee of Deutsche Bank, DWS, DBSC or DBAM, and for all
such Directors as a group:
<TABLE>
<CAPTION>
Total Compensation From Fund,
Aggregate Compensation The Germany Fund, Inc. and
Name of Director From Fund The New Germany Fund, Inc.
---------------- ---------------------- --------------------------
<S> <C> <C>
Otto Wolff von Amerongen $ 9,750 $ 19,500
Edward C. Schmults $15,000 $ 30,000
Werner Walbrol $15,000 $ 29,250
Robert H. Wadsworth $15,000 $ 45,750
Dr. Juergen F. Strube $ 9,000 $ 18,000
Prof. Dr. Claus Kohler $10,500 $ 21,750
------- ---------
Total $74,250 $ 164,250
======= =========
</TABLE>
No compensation is paid by the Fund to Directors or officers who are
employees of Deutsche Bank, DWS, DBSC or DBAM.
7
<PAGE>
The officers of the Fund other than as shown above are:
<TABLE>
<CAPTION>
Name Age Position with Fund Principal Occupations During Past Five Years
---- --- ------------------ --------------------------------------------
<S> <C> <C>
G. Richard Stamberger 47 Chief Executive Officer Managing Director of DBSC (since 1993).
and Executive Managing Director of C.J. Lawrence, Inc.
Vice President (1990-1993). Managing Director of Pru-
dential Equity Management Associates at
the Prudential Insurance Co. of America
(1984-1989).
Robert R. Gambee 51 Vice President, Secretary Director of DBSC (since 1992). First Vice
and Treasurer President of DBSC (1987-1991).
Joseph Cheung 35 Assistant Secretary and Assistant Vice President (since 1994) and
Assistant Treasurer Associate (1991-1994) of DBSC. Senior
Accountant at Deloitte & Touche
(prior thereto).
</TABLE>
The officers of the Fund are elected annually by the Board of Directors at
their meeting following the Annual Meeting of Stockholders.
The Board unanimously recommends a vote FOR Proposal 1.
Required Vote. The affirmative vote of the holders of a majority of the
shares represented at the Meeting is required for the election of each Director.
PROPOSAL 2: SELECTION OF INDEPENDENT ACCOUNTANTS
A majority of members of the Board of Directors, including a majority of
the members of the Board of Directors who are not "interested" Directors (as
defined in the 1940 Act) of the Fund have selected Price Waterhouse LLP as
independent accountants for the Fund for the fiscal year ending October 31,
1995. The ratification of the selection of independent accountants is to be
voted upon at the Meeting and it is intended that the persons named in the
accompanying Proxy will vote for Price Waterhouse LLP. A representative of Price
Waterhouse LLP will be present at the Meeting and will have the opportunity to
make a statement and is expected to be available to answer appropriate questions
concerning the Fund's financial statements.
The Board unanimously recommends a vote FOR Proposal 2.
Required Vote. The affirmative vote of the holders of a simple majority of
the shares represented at the Meeting is required for the ratification of the
selection by the Board of Directors of Price Waterhouse LLP as independent
accountants for the fiscal year ending October 31, 1995.
PROPOSAL 3: STOCKHOLDER PROPOSAL
A beneficial owner (the "proponent") of Common Stock of the Fund has
informed the Fund that he intends to present a proposal for action at the
Meeting. The proponent's name and address and the number of shares owned by him
will be furnished by the Secretary of the Fund upon request.
8
<PAGE>
"RESOLVED: That the stockholders request that the Board of Directors permit
stockholders to realize the full net asset value of their shares by
approving and submitting to stockholders, within 60 days, a plan whereby
The Future Germany Fund, Inc. ("Fund") would be liquidated."
The proponent has requested that the following statement be included in the
proxy statement in support of the proposal:
"The Fund is selling at an exceptionally large discount to its net
asset value. According to the New York Times, the Fund's discount on
January 27, 1995 was 19.06% -- among the highest of any European
closed-end funds. Similarly, according to PaineWebber Inc., the Fund's
average discount for the quarter ended December 16, 1994 was the greatest
of any European fund except for the New Germany Fund (which had an equally
high discount). The fact that another Germany fund was tied with our Fund
for this dubious distinction is no coincidence: Since there are four
closed-end Germany funds, the supply of these funds simply exceeds the
demand. Thus, even though the price of the stocks your Fund owns has
increased along with the rest of the German market, the price at which you
can sell your Fund shares has remained depressed.
"Shareholders of the Germany Fund of Canada recently voted to convert
that fund into an open-end mutual fund. They did so after a financial
advisor hired by the Germany Fund of Canada (which was trading at a
smaller discount than our Fund is) concluded that failure to liquidate or
open-end that fund would prevent stockholders from selling their stock
near its net value.
"The same is true of our Fund: if this proposal passes and the Fund
liquidates, the Fund would simply sell all the stocks it owns and
distribute the net proceeds to shareholders. For example, if the Fund had
liquidated at the end of 1994, it could have distributed almost $18.35 per
share to shareholders, representing a rapid profit to shareholders of
almost $4 per share over the market price.
"Management's opposition to this resolution presents some curious
arguments. Management contends `liquidation would entail significant
expenses.' However, the costs identified by management are only $0.12 per
share -- a tiny fraction of the $4 per share discount. Management raises
the fear that liquidation of the Fund would depress the price of stocks it
owns. But this seems highly unlikely given the small size of the Fund's
holdings relative to the market value of the major multinational companies
in which it owns shares. Moreover, nothing in the resolution requires that
the Fund's liquidation be instantaneous; management would surely not
contend that the Fund's ordinary stock sales (it sold more than 30% of its
portfolio in each of the last four years) depressed prices on the
Frankfurt stock exchange. Management's argument that certain tax benefits
would be `lost' is speculative, whereas the gains from liquidation are
not.
"Management also contends that `discounts are not inherently bad,'
suggesting that a future narrowing of the discount `would represent a
favorable investment opportunity.' By this statement, management is
advocating that shareholders buy more Fund shares if their price rises
(without the net asset value rising); why this would be a wise investment
decision is completely unclear. Finally, management notes it has
repurchased Fund shares. Yet the Germany Fund of Canada's repurchase of
more than 1,000,000 of its own shares failed to reduce its discount. The
same is apparently true of our Fund, the discount of which has been
widening.
9
<PAGE>
"If this resolution succeeds, stockholders who wish to continue their
investment in German stocks could reinvest their distributions in one of
the other three German closed-end funds, or in an open-end mutual fund
investing in Germany, or directly in German stocks. If this resolution is
not adopted, stockholders would be forced either to sell their shares at
prices below their net value or to wait and hope that the discount will
narrow. Given the overabundance of Germany funds and the increasing ease
of buying foreign securities directly, the latter may never happen.
"I have been a shareholder of the Fund since 1991. Please act in your
own interest by voting for this resolution.
"Please call me at 510-559-9795 if you'd like to discuss this."
OPPOSING STATEMENT OF YOUR BOARD OF DIRECTORS
For the reasons discussed below, the Board of Directors unanimously
recommends that you vote AGAINST this stockholder proposal.
Long-Term Investment Opportunities Would Be Lost. Your Fund has been
conceived as a vehicle for long-term investment through participation in a
professionally managed equity portfolio. Your Fund offers the diversification
and efficiency of investment that may not be available to an individual investor
because of the difficulties of direct foreign investments. Your Board of
Directors believes that your Fund has been successful in its objective and is
pleased with the performance of the investment manager. During 1993 and 1994 the
Standard & Poor's 500 Stock Index (the U.S. equity market's most widely followed
benchmark) increased 5.49%, whereas the market price return on your Fund shares
(including reinvestment of dividends) was 34.3% during the same two-year period.
Liquidation of your Fund would deprive all stockholders of the future
opportunity for long-term investment gain.
Benefits of Liquidation Are Exaggerated. Liquidation of your Fund would not
produce the benefits suggested in the proposal (which as required by Maryland
law is advisory only). Liquidation would entail significant expenses, probably
depressed prices for your Fund's portfolio securities, loss of valuable tax
benefits to shelter future investment gains, potentially significant tax
liabilities to investors on liquidation and forced investor brokerage costs on
reinvestment. Also, due to the uncertain timing of a formal liquidation (which
would require approval of your Board of Directors, a second stockholder vote and
a 662/3% stockholder approval), the market price of your Fund shares could be
very different by then. For all of these reasons, the $4 per share "profit"
suggested by the proponent could easily disappear.
First, in a liquidation your Fund would incur brokerage costs on the sale
of its portfolio of stocks of about $0.9 million, as well as numerous direct
costs, including expenses of a second proxy and stockholder meeting, otherwise
unnecessary legal and accounting fees and probable loss of certain assets such
as foreign withholding tax receivables. Using year-end data, all these costs
would approximate $1.5 million. There may be other unidentified costs that must
be borne by the Fund.
Second, a liquidation-oriented sale of your Fund's substantial portfolio
holdings in a number of stocks could depress those share prices. It is not
possible to estimate the extent to which such a sale would influence these
shares' prices, since this is dependent on the general market environment at the
time of sale. However, it is an indication of the potential for depressing these
prices that there were several days during 1994 when the value of your Fund's
holdings was equivalent to more than 10% of the entire day's trading volume in
all stocks on the Frankfurt Stock Exchange.
10
<PAGE>
Third, liquidating your Fund would force it to abandon valuable tax
benefits ($17 million at year-end) that would otherwise be available to shelter
future realized capital gains from mandatory taxable distribution to you.
Fourth, as stockholders you would be subject to applicable Federal, state
and local income taxes on the difference between the net liquidation proceeds
received from your Fund and your tax basis in Fund shares (just as if you sold
your shares in the market for a price equal to the net liquidation proceeds). In
addition to these taxes, you would incur brokerage or other transaction costs if
you reinvested in another fund as suggested by the proponent.
The proponent makes it sound as though a liquidation of your Fund would be
"easy money" for stockholders. The reality is quite different. In summary, you
could end up with a lot less.
Discounts Are Not Inherently Bad. For example, discounts permit investors
to purchase additional Fund shares with significantly more than a dollar of net
assets working for them for every dollar invested. Closed-end fund share price
discounts from net asset value have been much studied and discussed. Management
of your Fund has formally studied discounts as well. Coefficients of correlation
between your Fund's discount since inception and changes in German share prices,
the dollar/Deutsche Mark exchange rate and other likely influences on supply and
demand for your Fund account for only about half of the changes in your Fund's
discount, leaving the remaining influences on its discount unexplained. These
changes can be very substantial and highly volatile. For example, during 1993
and 1994, your Fund traded between a premium of 0.5% and a discount of 21.7%,
and averaged a discount of 11.5%. Any future narrowing in your Fund's discount
would represent a favorable investment opportunity for you as stockholders. Your
Board of Directors has in the past authorized targeted share repurchases. This
policy is being continued.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE AGAINST THIS
STOCKHOLDER PROPOSAL.
ADDRESS OF INVESTMENT ADVISER AND MANAGER
The principal office of the Investment Adviser is located at Bockenheimer
Landstrasse 42, 60323 Frankfurt am Main, Federal Republic of Germany. The
corporate office of the Manager is located at 31 West 52nd Street, New York, New
York 10019.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of February 6, 1995, no person, to the knowledge of management, owned of
record or beneficially, more than 5% of the outstanding Common Stock of the
Fund.
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OTHER MATTERS
No business other than as set forth herein is expected to come before the
Meeting, but should any other matter requiring a vote of stockholders arise,
including any question as to an adjournment of the Meeting, the persons named in
the enclosed Proxy will vote thereon according to their best judgment in the
interests of the Fund.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the Fund's Annual Meeting
of Stockholders in 1996 must be received by the Fund on or before November 28,
1995, in order to be included in the Fund's proxy statement and form of proxy
relating to that meeting.
EXPENSES OF PROXY SOLICITATION
The cost of preparing, assembling and mailing material in connection with
this solicitation will be borne by the Fund. In addition to the use of mails,
proxies may be solicited personally by regular employees of the Fund or the
Manager or by telephone or telegraph. Brokerage houses, banks and other
fiduciaries may be requested to forward proxy solicitation materials to their
principals to obtain authorization for the execution of proxies, and they will
be reimbursed by the Fund for out-of-pocket expenses incurred in this
connection. The Fund has also made arrangements with Morrow & Co., Inc. to
assist in the solicitation of proxies, if called upon by the Fund, at an
estimated fee of $7,500 plus reimbursement of normal expenses.
ANNUAL REPORT DELIVERY
The Fund will furnish, without charge, a copy of its annual report for the
fiscal year ended October 31, 1994 to any stockholder upon request. Such
requests should be directed by mail to The Future Germany Fund, Inc., 31 West
52nd Street, New York, New York 10019 or by telephone to 1-800-GERMANY.
Robert R. Gambee
Secretary
Dated: March 6, 1995
STOCKHOLDERS WHO DO NOT EXPECT TO BE PRESENT AT THE MEETING AND WHO WISH TO HAVE
THEIR SHARES VOTED ARE REQUESTED TO DATE AND SIGN THE ENCLOSED PROXY AND RETURN
IT TO THE FUND.
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THE FUTURE GERMANY FUND, INC.
31 West 52nd Street
New York, New York 10019
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert R. Gambee and Joseph Cheung as Proxies,
each with the power of substitution, and hereby authorizes each of them to
represent and to vote, as designated below, all the shares of common stock of
The Future Germany Fund, Inc. (the "Fund") held of record by the undersigned on
February 6, 1995 at an Annual Meeting of Stockholders to be held on March 27,
1995 or any adjournment thereof.
<TABLE>
<CAPTION>
<S> <C> <C>
1.ELECTION OF DIRECTORS. []FOR all nominees listed below [] WITHHOLDING AUTHORITY
(except as marked to the contrary below) to vote for all nominees listed below
(Instruction: To withhold authority for any individual nominee strike a line through the nominee's name in the list below.)
CLASS I
(to serve until the 1998 Annual Meeting of Stockholders)
Dr. Rolf-Ernst Breuer James Macmillan-Scott
Detlef Bierbaum Edward C. Schmults
2.TO RATIFY THE SELECTION BY THE BOARD OF DIRECTORS OF PRICE WATERHOUSE LLP
AS INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING OCTOBER 31, 1995.
[]FOR []AGAINST []ABSTAIN
3.TO ADOPT A SHOCKHOLDER PROPOSAL REQUESTING THE BOARD OF DIRECTORS TO APPROVE AND SUBMIT TO STOCKHOLDERS WITHIN 60 DAYS A PLAN
WHEREBY THE FUND WOULD BE LIQUIDATED.
[]FOR []AGAINST []ABSTAIN
4.TO CONSIDER AND ACT UPON ANY OTHER BUSINESS AS MAY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
</TABLE>
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, this proxy will
be voted FOR Proposals 1 and 2 and will be voted AGAINST Proposal 3.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please provide the full name
of the corporation and the signature of the authorized officer signing on its
behalf.
------------------------------------
Name (please print)
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Name of Corporation (if applicable)
(By)______________(Date)______ 1995
(Signature)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY USING THE ENCLOSED ENVELOPE.
